GATEWAY MINING LIMITED — Annual Report 2009

Sep 29, 2009

GATEWAY MINING LIMITED ABN: 31 008 402 391

DIRECTORS’ REPORT

Your directors present their report on the company for the financial year ended 30 June 2009

DIRECTORS

The names and details of the directors of the company in office at any time during or since the end of the year are:

Names, Qualifications, Experience and Special Responsibilities

Brian Gomez ( Non-Executive Chairman) B.Sc (Earth Sciences) from Macquarie University

Appointed Chairman in 1995. Board member since 1995. Brian has been analysing and writing about resource projects and issues in Australia and internationally for more than two decades. He has acted in a corporate advisory capacity to a number of listed and unlisted resource companies and delivered papers at International Conferences. Brian is a former Jefferson Fellow at the East West Center in Honolulu and a Fellow of the Institute of Company Directors.

Robert A.Creelman (Non-Executive Director) BA.MSc (Hons), PhD., F.Aust.IMM.CP (Geol)

Board member since 1994. Dr Creelman is a Fellow of the Australian Institute of Mining and Metallurgy, and a Certified Professional (Geology) with the Institute. He has had over 30 years experience in the geosciences and allied engineering disciplines and has been a director of public companies involved in exploration and mining.

He recently accepted an Adjunct Associate Professorship on a part time basis at the University of Western Sydney, and is a Research Fellow at the University of Newcastle in coal combustion and utilisation. He has in the past been in CSIRO involvement in the development of automated mineralogy for the minerals industry. Through his consultancy, he has been involved in exploration for gold, base metals, fuel and platinum resources.

Brian F. Thornton (Non-Executive Director) B.Ec., F.Fin

Board member since 2001. Brian Thornton, a graduate in Economics from the Australian National University and a Fellow of the Financial Services Institute of Australia, has a diverse background covering the public and private sectors. He has worked as an adviser to the resources sector for almost 20 years and consults to a number of listed gold base metals and bulk commodity companies.

His expertise covers IPO’s, mergers and acquisitions and capital raisings.

He is also a director of Gel Resources Pty Limited and Chairman of Xanadu Mines Ltd.

Directors and Specified Executives (being key management personnel) Interests

As at the date of this report, the interests of the directors and specified executives in the shares and options of the company were:

Directors:	Ordinary shares:	Options over ordinary shares:
B.Gomez	363,750	350,000
R.A.Creelman	393,000	350,000
B.F. Thornton	10,643,625	350,000
Specified Executives:	Ordinary shares:	Options over ordinary shares:
S.Lian	1,486,978	450,000

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GATEWAY MINING LIMITED ABN: 31 008 402 391

DIRECTORS’ REPORT (continued)

COMPANY SECRETARY

Mr. Anthony C. de Govrik – Solicitor. Mr. de Govrik also acts as the company solicitor and was appointed company secretary on 8 October 1992.

PRINCIPAL ACTIVITIES

The principal activities of the company during the financial year were resource exploration and investment. There were no significant changes in the nature of the activities of the company that occurred during the year.

RESULTS AND DIVIDENDS

The loss after tax for the year was $1,859,477 (2008 loss - $178,614). No dividends have been declared or paid during the year.

REVIEW OF OPERATIONS

Significant VTEM geophysical results have been outlined at Cowra. A total of 16.8 line kilometres of ground electromagnetic surveys and 35 line kilometres of ground electromagnetic surveys were completed over 9 VTEM targets. The JV partners are expected to commence drill programme in the next quarter.

The Montague area review of exploration data at Gidgee is still continuing and has recognised the significance of previous drilling results at Rosie North, including 33m @0.67 g/t Au and 102m @0.42g/t Au in hole WRC012.

Aircore drilling along the interpreted trend that hosts The Cup and Julia Fault has resulted in elevated Au, As and Cu, confirming the prospectivity of these areas. Intersections at Julia’s fault include 5m @3.47g/t Au from a 5 metre composite sample.

SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS AND FINANCIAL POSITION

During the year, the company had raised $800,000 through two private share placements by issuing a total of 9,000,000 fully paid ordinary shares.

The main factors contributing to a fall in the company’s net equity from $9,912,304 to $8,794,827 were the result of the fall in market value of the company’s listed share investments and the write off of an unlisted investment.

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GATEWAY MINING LIMITED ABN: 31 008 402 391

DIRECTORS’ REPORT (continued)

ENVIRONMENTAL REGULATION

The company’s operations are subject to various environmental regulations under State regulations. The Directors are not aware of any material breaches during the financial year.

SIGNIFICANT EVENTS AFTER THE BALANCE DATE

On 11[th] August 2009, the company raised $500,000 through a private placement of 6,250,000 fully paid ordinary shares at 8 cents under its share purchase plan.

On 18[th] August 2009, the company received a Bidder Statement issued by Citigold Corporation Ltd with regard to an offer by Citigold to acquire all ordinary shares in Gateway Mining Ltd in the ratio of 2 Citigold shares for every 5 Gateway shares.

FUTURE DEVELOPMENTS, PROSPECTS AND BUSINESS STRATEGIES

The directors believe, on reasonable grounds, that it would unreasonably prejudice the interests of the company if any further information on likely developments, future prospects and business strategies in the operations of the company and the expected results of these operations, were included herein.

SHARE OPTIONS

At the date of this report, there were 10,250,000 options (2008 - 4,000,000). The 4,000,000 options are exercisable at 30 cents per option on or before 30 November 2011 and the balances of 6,250,000 options are exercisable at 15 cents per option on or before 30 June 2011.

EMPLOYEES

There were 2 employees as at 30 June 2009 (2008 - 2)

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GATEWAY MINING LIMITED ABN: 31 008 402 391

DIRECTORS’ REPORT (continued)

REMUNERATION REPORT

Directors’ and Specified Executives (being key management personnel) Remuneration

The company’s policy for determining the nature and amount of emoluments of board members and executives is as follows:

Company officers and directors are remunerated to a level consistent with the size of the company. The company’s aim is to remunerate at a level that will attract and retain suitably qualified directors and employees.

The remuneration of non-executive directors is determined by the Board within the maximum amount approved by the shareholders of the company from time to time. This remuneration is by way of a fixed fee and supplemented by the issue of incentive options as approved by shareholders in a general meeting of the company.

The remuneration structure for executive officers is based on a number of factors including experience of the individual concerned and their overall performance. The contracts for service between the company and executives are on a continuing basis the terms of which are not expected to change in the immediate future.

No remuneration is linked to the current performance of the company. This may change in time.

Directors’ Remuneration

	Short-term benefits	Short-term benefits	Short-term benefits	Post-employment benefits	Share- based payments	Total
Non-executive Directors:	Fees	Non-monetary benefits	Other short- termbenefits	Super- Contribution	Options
	$	$	$	$	$	$
B. Gomez	25,000	-	-	-	-	25,000
R.A. Creelman	28,600	-	4,923	-	-	33,523
B.F.Thornton	20,000	-	-	-	-	20,000
	73,600	-	4,923	-	-	78,523

Specified Executives Remuneration

		Short-term benefits	Short-term benefits		Post- employment benefits	Share- based payments	Total
	Cash Salary	Fees	Non-monetary benefits	Other short-term benefits	Super- Contribution	Options
Name:	$	$	$	$	$	$	$
S. Lian (CEO)	120,000	-	-	17,305	11,547	-	148,852
Allan Pellegrini (Exploration Consultant)	-	111,122	-	5,114	-	-	116,236
Mark.Gordon (Exploration Consultant)	-	57,559	-	-	-	-	57,559
	120,000	168,681	-	22,419	11,547	-	322,647

No termination benefits were paid during the financial year. No options were issued as share based payments during the year.

Related Party Transactions

Since the end of previous financial year, other than the remuneration disclosed above, no director has received any benefits.

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GATEWAY MINING LIMITED ABN: 31 008 402 391

DIRECTORS’ REPORT (continued)

DIRECTORS’ MEETINGS

During the financial year, 6 meetings of directors (including committees) were held. Attendances were:

	Meetings held	Meetings attended
B. Gomez	6	6
R.A.Creelman	6	6
B.F.Thornton	6	5

The company does not have an Audit Committee as this function is performed by the Board of Directors.

CORPORATE GOVERNANCE

In recognising the need for the highest standards of corporate behaviour and accountability, the directors of Gateway Mining Limited support and adhere to the principles of corporate governance. These principles have been formalised by the Board in the corporate governance statement contained in the additional ASX information section of the annual report.

PROCEEDINGS ON BEHALF OF THE COMPANY

No person has applied for leave of Court to bring proceedings on behalf of the company or intervene in any proceedings to which the company is a party for the purpose of taking responsibility on behalf of the company for all or any part of those proceedings. The company was not a party to any such proceedings during the year.

NON-AUDIT SERVICES

There were no non-audit services performed by the external auditor during the financial year.

AUDITOR INDEPENDENCE DECLARATION

The auditor independence declaration for the year ended 30 June 2009 has been received and can be found on page 6 of this financial report.

INDEMNIFYING OFFICERS OR AUDITOR

The company has paid a premium to insure the directors and officers of the company. The insurance premiums relate to:

• Costs and expenses incurred by the relevant officers in defending proceedings, whether civil or criminal and whatever their outcome; and

• Other liabilities that may arise from their position, with the exception of conduct involving a willful breach of duty or improper use of information or position to gain a personal advantage.

Signed in accordance with a resolution of the Board of Directors.

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Brian Gomez Director

Dated this 29[th] day of September 2009 Sydney

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GATEWAY MINING LIMITED ABN: 31 008 402 391

AUDITORS INDEPENDENCE DECLARATION UNDER SECTION 307C OF THE CORPORATIONS ACT 2001 TO THE DIRECTORS OF GATEWAY MINING LIMITED

Priestley &Morris

Chartered Accountants

I declare that, to the best of my knowledge and belief, during the year ended 30 June 2009 there have been:

• (1) no contraventions of the auditor independence requirements as set out in the Corporations Act 2001 in relation to the audit; and

• (2) no contraventions of any applicable code of professional conduct in relation to the audit.

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Priestley & Morris Chartered Accountants

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M A Nevill Partner

Dated this 29th day of September 2009

Priestley & Morris - ABN: 51 502 720 047

Level 7, 3 Horwood Place, Parramatta NSW 2150 PO Box 19, Parramatta NSW 2124 Tel: +61 2 8836 1500 Fax: +61 2 8836 1555

E: email@priestleymorris.com.au W: www.priestleymorris.com.au

Liability limited by a scheme approved under Professional Standards Legislation

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GATEWAY MINING LIMITED ABN: 31 008 402 391

INCOME STATEMENT FOR THE YEAR ENDED 30 JUNE 2009

INCOME STATEMENT FOR THE YEAR ENDED 30 JUNE 2009
NOTE Revenue 2 Depreciation and amortisation expense 3 Exploration expenditure written off Employee benefit expenses Professional services rendered Office expenses Compliance fees Share registry fees Travel and entertainment expenses Impairment loss Investment write off Other expenses Loss before income tax expense 3 Income tax expense 4 Loss for the year Net loss attributable to members of Gateway Mining Limited 14 Basic earnings per share 6 Diluted earnings per share 6	2009$
	10,834 (1,912) - (179,564) (108,784) (48,698) (29,517) (13,636) (27,496) (861,095) (550,000) (49,609)
	(1,859,477) -
	(1,859,477)
	(1,859,477)

The accompanying notes form part of these financial statements

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GATEWAY MINING LIMITED ABN: 31 008 402 391

BALANCE SHEET AS AT 30 JUNE 2009

NOTE CURRENT ASSETS Cash and cash equivalents 17b Trade and other receivables 7 Other assets 8 TOTAL CURRENT ASSETS NON-CURRENT ASSETS Trade and other receivables 7 Financial assets 9 Plant and equipment 10 Deferred exploration and evaluation expenditure 11 TOTAL NON-CURRENT ASSETS TOTAL ASSETS CURRENT LIABILITIES Trade and other payables 12 TOTAL CURRENT LIABILITIES TOTAL LIABILITIES NET ASSETS EQUITY Issued capital 13 Reserves 15 Accumulated losses 14 TOTAL EQUITY	2009 $		2008 $
	126,550 79,121 7,500		366,714 68,176 -
	213,171		434,890
	12,608 681,523 8,734 7,935,623		12,608 2,079,284 5,168 7,442,076
	8,638,488		9,539,136
	8,851,659		9,974,026
	56,832		61,722
	56,832		61,722
	56,832		61,722
	8,794,827		9,912,304
	20,897,760 133,000 (12,235,933)		20,155,760 133,000 (10,376,456)
	8,794,827		9,912,304

The accompanying notes form part of these financial statements

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GATEWAY MINING LIMITED ABN: 31 008 402 391

CASH FLOW STATEMENT FOR THE YEAR ENDED 30 JUNE 2009

NOTE CASH FLOWS FROM OPERATING ACTIVITIES Payments to suppliers and employees Interest and other income received NET CASH USED IN OPERATING ACTIVITIES 17a CASH FLOWS FROM INVESTING ACTIVITIES Proceeds from sale of financial assets Purchase of plant and equipment Purchase of listed securities Purchase of unlisted securities Expenditure on mining interests NET CASH USED IN INVESTING ACTIVITIES CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from issues of ordinary shares Placement fees NET CASH PROVIDED BY FINANCING ACTIVITIES NET DECREASE IN CASH HELD Add opening cash brought forward CLOSING CASH CARRIED FORWARD 17b	2009$		2008 $
	(480,640) 10,834		(468,953) 33,035
	(469,806)		(435,918)
	- (5,478) (13,333) - (493,547)		873,585 - (334,374) (7,212) (650,467)
	(512,358)		(118,468)
	800,000 (58,000)		- -
	742,000		-
	(240,164)		(554,386)
	366,714		921,100
	126,550		366,714

The accompanying notes form part of these financial statements.

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GATEWAY MINING LIMITED ABN: 31 008 402 391

STATEMENT OF CHANGES IN EQUITY FOR THE ENDED 30 JUNE 2009

Balance at1.7.2007 Share base payments Cumulative revaluation increment realised on disposal of financial assets Revaluation decrement at balance date Loss at attributable to members of the company Balance at30.06.2008 Shares issued during the year Transaction costs Loss attributable to members of the company Balance at30.06.2009	Issued capital	Accumulated losses	Financial asset revaluation reserve	Share Based payments reserve	Total
	$ 20,155,760	$ (10,197,842) (178,614)	$ 1,194,874 (184,800) (1,010,074)	$ 103,000 30,000	11,255,792 30,000 (184,800) (1,010,074) (178,614)
	20,155,760	(10,376,456)	0	133,000	9,912,304
	800,000 (58,000)	(1,859,477)			800,000 (58,000) (1,859,477)
	20,897,760	(12,235,933)	0	133,000	8,794,827

The accompanying notes form part of these financial statements.

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GATEWAY MINING LIMITED ABN: 31 008 402 391

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2009

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

This financial report covers the financial statements and notes of Gateway Mining Limited as an individual entity.

Basis of Preparation

The financial report is a general-purpose financial report that has been prepared in accordance with Australian Accounting Standards, Australian Accounting Interpretations, other authoritative pronouncements of the Australian Accounting Standards Board and the Corporations Act 2001.

Australian Accounting Standards set out accounting policies that the AASB has concluded would result in a financial report containing relevant and reliable information about transactions, events and conditions. Compliance with Australian Accounting Standards ensures that the financial statements and notes also comply with International Financial Reporting Standards. Material accounting policies adopted in the preparation of this financial report are presented below and have been consistently applied unless otherwise stated.

The financial report has been prepared on an accruals basis and is based on historical costs modified, where applicable, by the measurement at fair value of selected non-current assets, financial assets and financial liabilities.

a. Income Tax

The income tax expense (revenue) for the year comprises current income tax expense (income) and deferred tax expense (income).

Current income tax expense charged to the profit or loss is the tax payable on taxable income calculated using applicable income tax rates enacted, or substantially enacted, as at reporting date. Current tax liabilities (assets) are therefore measured at the amounts expected to be paid to (recovered from) the relevant taxation authority.

Deferred income tax expense reflects movements in deferred tax asset and deferred tax liability balances during the year as well unused tax losses.

Current and deferred income tax expense (income) is charged or credited directly to equity instead of the profit or loss when the tax relates to items that are credited or charged directly to equity.

Deferred tax assets and liabilities are ascertained based on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. Deferred tax assets also result where amounts have been fully expensed but future tax deductions are available. No deferred income tax will be recognised from the initial recognition of an asset or liability, excluding a business combination, where there is no effect on accounting or taxable profit or loss.

Deferred tax assets and liabilities are calculated at the tax rates that are expected to apply to the period when the asset is realised or the liability is settled, based on tax rates enacted or substantively enacted at reporting date. Their measurement also reflects the manner in which management expects to recover or settle the carrying amount of the related asset or liability.

Deferred tax assets relating to temporary differences and unused tax losses are recognised only to the extent that is probable that future taxable profit will be available against which the benefits of the deferred tax asset can be utilised.

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GATEWAY MINING LIMITED ABN: 31 008 402 391

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2009

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

a. Income Tax (continued)

Current tax assets and liabilities are offset where a legally enforceable right of set-off exists and it is intended that net settlement or simultaneous realisation and settlement of the respective asset and liability will occur. Deferred tax assets and liabilities are offset where a legally enforceable right of set-off exists, the deferred tax assets and liabilities relate to income taxes levied by the same taxation authority on either the same taxable entity or different taxable entities where it is intended that net settlement or simultaneous realisation and settlement the respective asset and liability will occur in future periods in which significant amounts of deferred tax assets or liabilities are expected to be recovered or settled.

b. Goods and Services tax (GST)

Revenues, expenses and assets are recognised net of the amount of GST except where the amount of GST incurred is not recoverable from the Australian Tax Office. In these circumstances the GST is recognised as part of the cost of acquisition of the asset or as part of an item of the expense. Receivables and payables in the balance sheet are shown inclusive of GST.

Cash flows are presented in the cash flow statement on a gross basis, except for the GST component of investing and financing activities, which are disclosed as operating cash flows

c. Plant and Equipment

Plant and equipment are measured on the cost basis less where applicable, any accumulated depreciation and impairment losses.

The carrying amount of plant and equipment is reviewed annually by directors to ensure it is not in excess of the recoverable amount of these assets. The recoverable amount is assessed on the basis of the expected net cash flows which will be received from the assets employment and subsequent disposal. The expected net cash flows have been discounted to their present values in determining recoverable amounts.

Depreciation

Depreciation is provided on a reducing balance basis on all plant and equipment over their useful lives to the company commencing from the time the asset is held ready for use.

The depreciation rates used for each class of depreciable assets are:

Class of Fixed Asset: Depreciation rate: Plant and equipment 8 to 40%

The assets' residual values and useful lives are reviewed, and adjusted if appropriate, at each balance sheet date.

An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its estimated recoverable amount.

Gains and losses on disposals are determined by comparing proceeds with the carrying amount. These gains or losses are included in the income statement. When revalued assets are sold, amounts included in the revaluation reserves relating to that asset are transferred to retained earnings.

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GATEWAY MINING LIMITED ABN: 31 008 402 391

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2009

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

d. Financial instruments

Initial recognition and initial measurement

Financial assets and financial liabilities are recognised when the entity becomes a party to the contractual provisions to the instrument. For financial assets, this is equivalent to the date that the company commits itself to either the purchase or sale of the asset (i.e. trade date accounting is adopted).

Financial instruments are initially measured at fair value plus transaction costs, except where the instrument is classified ‘at fair value through profit or loss’, in which case transaction costs are expensed to profit or loss immediately.

Classification and subsequent measurement.

Financial instruments are subsequently measured at either fair value, amortised cost using the effective interest rate method or cost. Fair value represents the amount for which an asset could be exchanged or a liability settled, between knowledgeable, willing parties. Where available, quoted prices in an active market are used to determine fair value. In other circumstances, valuation techniques are adopted.

Available-for-sale financial assets

Available-for-sale financial assets are non-derivative financial assets either designated as such or that are not classified in any of the other categories. They comprise investments in the equity of other entities where there is neither a fixed maturity nor fixed or determinable payments.

Fair Value

Fair value is determined based on current bid prices for all quoted investments. Valuation techniques are applied to determine the fair value of all unlisted securities, including recent arm’s length transactions reference to similar instruments and option pricing models.

Impairment

At each reporting date, the company assesses whether there is objective evidence that a financial instrument has been impaired. In the case of available-for-sale financial instruments, a prolonged decline in the value of the instrument is considered to determine whether impairment has arisen. Impairment losses are recognised in the income statement.

Derecognition

Financial assets are derecognised where the contractual rights to receipt of cash flows expires or the asset is transferred to another party whereby the entity no longer has any significant continuing involvement in the risks and benefits associated with the asset. Financial liabilities are derecognised where the related obligations are either discharged, cancelled or expire.

e. Exploration and Development Expenditure

Costs carried forward

Exploration, evaluation and development expenditure incurred is accumulated in respect of each identifiable area of interest. These costs are only carried forward to the extent that they are expected to be recouped through the successful development of the area or where activities in the area have not yet reached a stage that permits reasonable assessment of the existence of economically recoverable reserves.

Accumulated costs in relation to an abandoned area are written off in full against profit in the year in which the decision to abandon the area is made.

Amortisation

When production commences, the accumulated costs for the relevant area of interest are amortised over the life of the area according to the rate of depletion of the economically recoverable reserves.

A regular review is undertaken of each area of interest to determine the appropriateness of continuity to carry forward costs in relation to that area of interest.

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GATEWAY MINING LIMITED ABN: 31 008 402 391

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2009

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

e. Exploration and Development Expenditure (continued)

Restoration costs

Costs of site restoration are provided over the life of the facility from when exploration commences and are included in the costs of that stage. Site restoration costs include the dismantling and removal of mining plant, equipment and building structures, waste removal, and rehabilitation of the site in accordance with clauses of the mining permits. Such costs have been determined using estimates of future costs, current legal requirements and technology on an undiscounted basis.

Any changes in the estimates for the costs are accounted on a prospective basis. In determining the costs of site restoration, there is uncertainty regarding the nature and extent of the restoration due to community expectations and future legislation. Accordingly the costs have been determined on the basis that the restoration will be completed within one year of abandoning the site.

No provision for restoration work has been made at this stage.

f. Cash and cash equivalents

Cash and cash equivalents include cash on hand and at call deposits with banks or financial institutions.

g. Comparative Figures

Where required by Accounting Standards, comparative figures have been adjusted to conform to changes in presentation for the current financial year. Provision for annual leave is now classified under Trade and Other Payables instead of Provisions as in prior years.

h. Revenue recognition

Revenue is recognised to the extent that it is probable that the economic benefits will flow to the company and the revenue can be reliably measured.

The following specific recognition criteria must also be met before revenue is recognised: Interest revenue is recognised when the company controls the right to receive interest payments. Revenue from the rendering of a service is recognised upon the delivery of the service to the customers. All revenue is stated net of the amount of goods and services tax (GST).

i. Employee benefits

Provision is made for the company's liability for employee benefits arising from services rendered by employees to balance date. Employee benefits expected to be settled within one year have been measured at the amounts expected to be paid when the liability is settled. Employee benefits payable later than one year have been measured at the present value of the estimated future cash outflows, including on-costs, to be made for those benefits.

Contributions are made by the company to an employee defined contribution superannuation fund and are charged as expenses when incurred.

j. Leases

Leases are classified at their inception as either operating or financial leases based on the economic substance of the agreement so as to reflect the risks and benefits incidental to ownership.

Operating leases

The minimum lease payments of operating leases, where the lessor effectively retains substantially all of the risks and benefits of ownership of the leased item, are recognised as an expense in the period in which they are incurred.

Finance leases

The company is not a party to any finance leases.

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GATEWAY MINING LIMITED ABN: 31 008 402 391

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2009

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

k. Earnings per share

Basic earnings per share is determined by dividing the net profit or loss attributable to members by the weighted average number of ordinary shares outstanding during the financial year.

Diluted earnings per share adjusts the figure used in determining earnings per share by taking into account amounts unpaid on ordinary shares and any reduction in earnings per share that will probably arise from the exercise of options outstanding during the financial year.

l. Sundry payables and accruals

Recognition is based upon amounts to be paid in the future for goods and services received, whether or not billed to the company.

m. Contributed equity

Issued and paid up capital is recognised at the fair value of the consideration received by the company. Any transactions costs arising on the issue of ordinary shares are recognised directly in equity as a reduction of the share proceeds received.

n. Impairment of Assets

At each reporting date, the company reviews the carrying value of its assets to determine whether there is any indication that those assets have been impaired. If such an indication exists, the recoverable amount of the asset, being the higher of the asset's fair value less costs to sell and value in use, is compared to the asset's carrying value. Any excess of the asset's carrying value over its recoverable amount is expensed to the income statement.

Where it is not possible to estimate the recoverable amount of an individual asset, the company estimates the recoverable amount of the cash-generating unit to which the asset belongs.

o. Critical accounting estimates and judgments

The directors evaluate estimates and judgments incorporated into the financial report based on historical knowledge and best available current information. Estimates assume a reasonable expectation of future events and are based on historical trends and economic data, obtained both externally and from within the company.

Key estimates - Impairment

The company assesses impairment at each reporting date by evaluating conditions specific to the company that may lead to impairment of assets. When an impairment trigger exists, the recoverable amount of the asset is determined. Value in use calculations performed in assessing recoverable amounts incorporate a number of key estimates.

Plant and equipment, deferred exploration and evaluation expenditure and financial assets have been reviewed by the company. Impairment losses of $861,095 have been taken up in relation to financial assets.

Key judgments – Exploration and Evaluation Expenditure

The company capitalises expenditure relating to exploration and evaluation where it is considered likely to be recoverable or where the activities have not reached a stage which permits a reasonable assessment of the existence of reserves. While there are certain areas of interest from which no reserves have been extracted, the directors are of the continued belief that such expenditure should not be written off since feasibility studies in such areas have not yet concluded. Such capitalised expenditure is carried at reporting date at $7,935,623.

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GATEWAY MINING LIMITED ABN: 31 008 402 391

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2009

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2009
NOTE NOTE 2: REVENUE Non-operating activities Interest received 2a Other revenue 3b Gain on disposal of financial assets 3b Total revenue a. Interest revenue from: - other persons Total interest revenue NOTE 3: LOSS FOR THE YEAR a. Expenses Depreciation of non-current assets: - plant and equipment Share based payment to directors, employees and consultants Rental expense on operating leases: - minimum lease payments b. Significant revenues and expenses The following significant revenues and expenses are relevant in explaining the financial performance: Revenue Net gain on disposal of non-current assets: - Financial assets Option fee received to exercise 35% interest in Barrelmaker and Airport gold exploration tenements Expenses Impairment of financial assets Investment write off	2009 $		2008 $
	10,834 - -		33,035 500,000 366,985
	10,834		900,020
	10,834		33,035
	10,834		33,035
			2,054
			30,000
			44,678
	-		366,985
	-		500,000
	861,095 550,000
	861,095		577,060
	550,000		-

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GATEWAY MINING LIMITED ABN: 31 008 402 391

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2009

NOTE 4: INCOME TAX EXPENSE The prima facie tax on profit from ordinary activities before income tax is reconciled to the income tax expense as follows: Prima facie tax payable (benefit) on profit (loss) from ordinary activities before income tax at 30% (2008 – 30%) Add tax effect of permanent differences - share based payments - write off investment - impairment loss Income tax expense (benefit) arising from profit (loss) Utilisation of prior period tax losses Benefit of tax loss not brought to account Income tax expense attributable to profit (loss) from ordinary activities before income tax	2009 $		2008 $
	(557,843) - 165,000 258,328		(53,584) 9,000 - -
	(134,515) - 134,515		(44,584) - 44,584
	-		-

As at balance date, the Company has estimated carry-forward tax losses of $14,739,041 (2008: $13,884,618), which is an income tax benefit of $4,421,712 (2008: $4,165,385). The Company has net deferred timing differences of $8,485,623 (2008: $7,992,076), which represents a net deferred tax liability of $2,545,687 (2008: $2,397,623).

These potential net future tax benefits have not been brought into account. The taxation authority has not yet confirmed the quantum of the carried forward tax losses.

This future income tax benefit will only be obtained if:

(a) future assessable income is derived of a nature and of an amount sufficient to enable the benefit to be realised;

(b) the conditions for deductibility imposed by tax legislation continue to be complied with;

(c) no change in tax legislation adversely affects the company in realising the benefit.

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GATEWAY MINING LIMITED ABN: 31 008 402 391

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2009

NOTE 5: AUDITORS’ REMUNERATION Remuneration of the auditor of the company for: - auditing or reviewing the financial report NOTE 6: EARNINGS PER SHARE a. Reconciliation of earnings to profit or loss Loss Loss attributable to outside equity interest Earnings used in calculating basic and dilutive earnings per share b. Weighted average number of ordinary shares on issue used in the calculation of basic earnings per share c. Effect of dilutive securities: Share options Weighted average number of ordinary shares outstanding during the year used in calculation of dilutive earnings per share	2009 $	2009 $	2008 $
	20,100		20,000
	(1,859,477) -		(178,614) -
	(1,859,477)		(178,614)
	No of shares		No of shares
	105,607,894		101,122,962
	4,000,000		4,000,000
	109,607,894		105,122,962

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GATEWAY MINING LIMITED ABN: 31 008 402 391

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2009

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2009
NOTE 7: TRADE AND OTHER RECEIVABLES CURRENT Security deposits Goods & services tax receivable NON-CURRENT Security deposits	2009 $		2008 $
	62,702 16,419		57,748 10,428
	79,121		68,176
	12,608		12,608
	12,608		12,608

Current security deposits are mining bonds and have a floating interest rate, which has averaged 7.68% for the year (2008 – 6.87%). Non-current security deposits are non-interest bearing.

NOTE 8: OTHER ASSETS CURRENT Prepayments NOTE 9: FINANCIAL ASSETS NON-CURRENT Available for sale financial assets: Shares in listed corporations - at fair value Shares in unlisted corporation – at cost	7,500 7,500 674,311 7,212 681,523
		-
		-
	674,311 7,212	1,522,072 557,212
	681,523	2,079,284

Available for sale financial assets comprise investments in the ordinary issued capital of various entities. There are no fixed returns or fixed maturity dates attached to these investments.

The fair value of the unlisted available for sale financial asset cannot be reliably measured as variability in the range of reasonable fair estimates is significant. As a result, the unlisted investment is measured at cost. No intention to dispose of any unlisted available-for-sale financial assets existed at balance date.

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GATEWAY MINING LIMITED ABN: 31 008 402 391

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2009

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2009
	2009 $	2008 $
NOTE 10: PLANT AND EQUIPMENT
Plant and Equipment
At cost	97,917	92,440
Accumulated depreciation	(89,183)	(87,272)
Total Plant and Equipment	8,734	5,168
Reconciliations
Reconciliations of the carrying amounts of plant and equipment at the beginning and end of		the current and
previous financial year:
Plant and Equipment
Carrying amount at the beginning of the year:	5,168	7,222
Additions	5,478	-
Depreciation expense	(1,912)	(2,054)
Carrying amount at the end of the financial year	8,734	5,168
NOTE 11: DEFERRED EXPLORATION AND
EVALUATION EXPENDITURE
NON-CURRENT
Exploration Expenditure- exploration and evaluation
phases
Costs carried forward in respect of areas of interest at
beginning of the year	7,442,076	6,792,336
Additions	493,547	650,467
Expenditure written off	-	(727)
	7,935,623	7,442,076

The recoverability of the above is dependent upon further exploration and exploitation of commercially viable mineral deposits.

NOTE 12: TRADE AND OTHER PAYABLES

CURRENT Unsecured liabilities Sundry payables and accrued expenses Accrued employee annual leave entitlements	46,899 9,933 56,832
	46,899 9,933	51,789 9,933
	56,832	61,722

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GATEWAY MINING LIMITED ABN: 31 008 402 391

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2009

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2009
NOTE 13: ISSUED CAPITAL a. Ordinary shares fully paid Balance at beginning of year Issued shares Transaction costs Balance at end of year b. Movements in ordinary shares on issue At the beginning of the financial year Shares issued At end of the financial year	2009 $		2008 $
	20,155,760 800,000 (58,000)		20,155,760 -
	20,897,760		20,155,760
	No.		No.
	101,122,962 9,000,000		101,122,962 -
	110,122,962		101,122,962

c. Terms and conditions of ordinary shares

Ordinary shares have the right to receive dividends as declared and, in event of the winding up the company, to participate in the proceeds from the sale of all surplus assets in proportion to the number of shares and amount paid up on the shares held. Ordinary shares entitle their holder to vote, either in person or by proxy, at a meeting of the company.

d. Share options

At 30 June 2009, there were 4,000,000 options issued (30 June 2008: 4,000,000). The options are exercisable at 30 cents per option on or before 30 November 2011.

e. Capital Management

The directors control the capital of the company in order to ensure that adequate cash flows are generated to fund its operations and continue as a going concern.

The company's capital includes ordinary share capital, supported by financial assets.

There are no externally imposed capital requirements.

The directors effectively manage the company's capital by assessing the company's financial risks and responding to changes in these risks. These responses include share issues.

There have been no changes in the strategy adopted by management since the prior year.

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GATEWAY MINING LIMITED ABN: 31 008 402 391

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2009

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2009
NOTE 14: ACCUMULATED LOSSES Balance at the beginning of the financial year Loss attributed to the members of the entity Balance at end of the financial year	2009 $		2008 $
	(10,376,456) (1,859,477)		(10,197,842) (178,614)
	(12,235,933)		(10,376,456)

NOTE 15: RESERVES

Financial Asset Revaluation Reserve The financial asset reserve records revaluation of financial assets. Share Based Payments Reserve Balance at the beginning and end of the financial year 133,000 The share based payments reserve comprises the value of options granted calculated at grant using a Black-Scholes model. No options were granted in the 2009 financial year.
	133,000
	date

NOTE 16: EXPENDITURE COMMITMENTS

Lease expenditure commitments

Non-cancellable operating leases contracted for but not capitalised in the financial statements:

Payable - not later than 12 months - between 12 months and 5 years - greater than 5 years	46,465 205,204 - 251,669
	46,465 205,204 -	46,465 - -
	251,669	46,465

The above represents the lease on the office premises, being a non-cancellable operating lease, with payments made quarterly in advance. The lease expires within a five-year period and has an option to renew for a further three years. The rental rate review is calculated annually and fixed at 4%. Upon renewal the terms of the leases are renegotiated. At present these terms do not allow subletting.

Exploration expenditure commitments

In order to maintain current rights of tenure to exploration tenements, the Company is required to comply with the minimum expenditure obligations under the Mining Act. These obligations have been met. The future obligations which are subject to renegotiation when an application for a mining lease is made and at other times are not provided for in the financial statements.

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GATEWAY MINING LIMITED ABN: 31 008 402 391

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2009

NOTE 17: CASH FLOW INFORMATION a. Reconciliation of the loss after tax to net cash flows from operating activities Loss after income tax Non-cash flows in profit: - Depreciation - Share based payment - Exploration Expenditure written off - Impairment loss - Net gain on disposal of financial assets -Option fees received - Investment write off Changes in assets and liabilities: - Increase in receivables and other assets - Decrease in payables, accruals and provisions Net cash outflow from operating activities b. Reconciliation of cash Cash at the end of the financial year as shown in the statement of cash flows is reconciled to items in the Balance sheet as follows: - cash and cash equivalents	2009 $
	(1,859,477) 1,911 - - 861,095 - - 550,000 (18,445) (4,890)
	(469,806)
	126,550
	126,550

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GATEWAY MINING LIMITED ABN: 31 008 402 391

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2009

NOTE 18: FINANCIAL RISK MANAGEMENT

The company's financial instruments consist mainly of deposits at bank, receivables and payables, and available for sale financial assets.

The company does not have any derivative instruments at balance date.

The totals for each category of financial instruments, measured in accordance with AASB 139 as detailed in the accounting policies to these financial statements are as follows:

Financial Assets Cash and cash equivalents Trade and other receivables Available for sale financial assets Financial Liabilities Trade and other payables	2009 $	2008 $
	126,550 79,121 681,523	366,714 68,176 2,079,284
	887,194	2,514,174
	46,899	51,789
	46,899	51,789

Financial Risk Management Policies

The Board's overall risk management strategy seeks to assist the company in meeting its financial targets, whilst minimising potential adverse effects on financial performance. Risk management policies are approved and reviewed by the finance committee on a regular basis. These include credit risk policies and future cash flow requirements.

Financial Risk Exposures and Management

The main risks the company is exposed to through its financial instruments are interest rate risk, liquidity risk and credit risk.

Interest Rate Risk

Exposure to interest rate risk arises on financial assets and financial liabilities recognised at reporting date whereby a future change in interest rates will affect future cash flows or the fair value of fixed rate financial instruments.

The company does not have fixed rate financial instruments at balance date. It only manages floating rate financial instruments.

Liquidity risk

Liquidity risk arises from the possibility that the company might encounter difficulty in settling its debts or otherwise meeting its obligations related to financial liabilities and exploration expenditure. The company manages liquidity risk by monitoring forecast cash flows and ensuring that adequate funds are maintained During the 2009 year, the company raised funds through private share placements by issuing ordinary shares.

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GATEWAY MINING LIMITED ABN: 31 008 402 391

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2009

NOTE 18: FINANCIAL RISK MANAGEMENT (continued)

Financial liability and financial asset maturity analysis

The tables below reflect an undiscounted contractual maturity analysis for financial instruments.

Cash flows realised from financial assets reflect management's expectation as to the timing of realisation. Actual timing may therefore differ from that disclosed. The timing of cash flows presented in the table to settle financial liabilities reflects the earliest contractual settlement dates

Financial Assets: Cash Receivables & others Security deposits Available for sale financial assets Total anticipated inflows Financial Liabilities: Sundry payables and accruals Total expected outflows Net inflow on financial instruments	Maturing with 1 Year 2009 $ 2008 $	Maturing 1 to 5 Years 2009 $ 2008 $	Total 2009 $ 2008 $
	126,550 366,714 16,419 10,428 62,702 57,748 681,523 2,079,284	- - - - 12,608 12,608 - -	126,550 366,714 16,419 10,428 75,310 70,356 681,523 2,079,284
	887,194 2,514,174	12,608 12,608	899,802 2,526,782
	46,899 51,789	- -	46,899 51,789
	46,899 51,789	- -	46,899 51,789
	840,295 2,462,385	12,608 12,608	852,903 2,474,993

Credit Risk

The maximum exposure to credit risk, excluding the value of any collateral or other security, at balance date to recognised financial assets is the carrying amount, net of any provisions for impairment of those assets, as disclosed in the balance sheet and notes to the financial statements.

The company does not have any material credit risk exposure to any single receivable or group of receivables under financial instruments entered into by the company.

Net Fair Value

The net fair values of listed investments have been valued at the quoted market bid price at balance date, adjusted for transaction costs expected to be incurred. For unlisted investments where there is no organised financial market the net fair value has been based on cost. For all other assets and other liabilities the net fair value approximates their carrying value.

Sensitivity Analysis

The effect on the company’s results and equity at 30 June 2009 from exposure to interest rates risk at balance date would not be material.

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GATEWAY MINING LIMITED ABN: 31 008 402 391

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2009

NOTE 19: COMPANY DETAILS

The registered & principal office of the company is:

Level 7, 249 Pitt Street, Sydney, NSW 2000.

The company’s domicile is in Australia.

The company is incorporated in Australia.

NOTE 20: SEGMENT INFORMATION

The company operates in Australia predominantly in the mineral exploration industry, mainly gold.

NOTE 21: EVENTS AFTER THE BALANCE SHEET DATE

On 11[th] August 2009, the company raised $500,000 through an issue of 6,250,000 fully paid ordinary shares at 8 cents per share under its share purchase plan.

On 18[th] August 2009, the company received a Bidder’s Statement issued by Citigold Corporation Limited with regard to an offer by Citigold to acquire all ordinary shares in Gateway Mining in the ratio of 2 Citigold shares for every 5 Gateway shares.

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GATEWAY MINING LIMITED ABN: 31 008 402 391

DIRECTORS’ DECLARATION

The directors of the company declare that:

a. the financial statements and notes of the company are in accordance with the Corporations Act 2001: and:

(i) comply with Accounting Standards; and

(ii) give a true and fair view of the company’s financial position as at 30 June 2009 and of the performance for the year ended on that date of the company

b. the directors have been given the declarations by the Chief Executive Officer for the financial year ended 30 June 2009 as required by s.295A of the Corporations Act 2001, and

c. in the directors’ opinion there are reasonable grounds to believe that the company will be able to pay its debts as and when they become due and payable.

The declaration is made in accordance with a resolution of the Board of Directors.

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Brian Gomez Director

Dated this 29[th] day of September 2009 Sydney

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Priestley &Morris

GATEWAY MINING LIMITED ABN: 31 008 402 391

INDEPENDENT AUDIT REPORT TO THE MEMEBERS OF GATEWAY MINING LIMITED

Chartered Accountants

Report on the Financial Report

We have audited the accompanying financial report of Gateway Mining Limited which comprises the balance sheet as at 30 June 2009, and the income statement, statement of changes in equity and cash flow statement for the year ended on that date, a summary of significant accounting policies and other explanatory notes and the directors’ declaration for Gateway Mining Limited at the year’s end or from time to time during the financial year.

Directors’ Responsibility for the Financial Report

The directors of the company are responsible for the preparation and fair presentation of the financial report in accordance with Australian Accounting Standards (including the Australian Accounting Interpretations) and the Corporations Act 2001. This responsibility includes establishing and maintaining internal control relevant to the preparation and fair presentation of the financial report that is free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances. In Note 1, the Directors also state, in accordance with Accounting Standard 101: Presentation of Financial Statements, that compliance with Australian equivalents to International Financial Reporting Standards (IFRS) ensures that the financial report, comprising the financial statements and notes, complies with IFRS.

Auditor’s Responsibility

Our responsibility is to express an opinion on the financial report based on our audit. We conducted our audit in accordance with Australian Auditing Standards. These Auditing Standards require that we comply with relevant ethical requirements relating to audit engagements and plan and perform the audit to obtain reasonable assurance whether the financial report is free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial report. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial report, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the financial report in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the directors, as well as evaluating the overall presentation of the financial report.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Independence

In conducting our audit, we have complied with the independence requirements of the Corporation Act 2001. We confirm that the independence declaration required by the Corporation Act 2001, provided to the directors of Gateway Mining Limited on 29[th] September 2009, would be in the same terms if provided to the directors as at the date of this auditor’s report.

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GATEWAY MINING LIMITED ABN: 31 008 402 391

INDEPENDENT AUDIT REPORT TO THE MEMEBERS OF GATEWAY MINING LIMITED (continued)

Auditor’s Opinion

In our opinion:

1. the financial report of Gateway Mining Limited is in accordance with the Corporations Act 2001, including:

2. i. giving a true and fair view of the company’s financial position as at 30 June 2009 and of its performance for the year ended on that date

3. ii. complying with Accounting Standards in Australia (including Australian Accounting Interpretations) and Corporations Regulations 2001;

4. the financial report also complies with International Financial Reporting Standards as disclosed in Note 1.

Report on the Remuneration Report

We have audited the Remuneration Report included on page 3 of the report of the directors for the year ended 30 June 2009. The directors of the company are responsible for the preparation and presentation of the Remuneration Report in accordance with s 300A of the Corporations Act 2001 . Our responsibility is to express an opinion on the Remuneration Report, based on our audit conducted in accordance with Australian Auditing Standards.

Auditor’s Opinion

In our opinion the Remuneration Report of Gateway Mining Limited for the year ended 30 June 2009, complies with s300A of the Corporations Act 2001.

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Priestley & Morris Chartered Accountants

==> picture [82 x 23] intentionally omitted <==

M A Nevill Partner

Dated this 29[th] day of September 2009

Priestley & Morris - ABN: 51 502 720 047

Level 7, 3 Horwood Place, Parramatta NSW 2150 PO Box 19, Parramatta NSW 2124 Tel: +61 2 8836 1500 Fax: +61 2 8836 1555

==> picture [35 x 54] intentionally omitted <==

Liability limited by a scheme approved under Professional Standards Legislation

E: email@priestleymorris.com.au W: www.priestleymorris.com.au

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